Feds to take a closer look at patent trolls with patent trolls

Is trolling anticompetitive? Upcoming forum explores the issue with all parties.

US antitrust enforcers are getting mighty interested in patent trolls. The Federal Trade Commission has even taken to calling these lawsuit-happy companies "patent assertion entities," or PAEs.

"There's a possibility of competitive harm here," said Joseph Wayland, who was the head of antitrust enforcement at the Justice Department until last week. Wayland just left the government for private practice, and he told the Wall Street Journal there is "huge energy, particularly at a senior level" being spent on scrutinizing the intersection of patents and antitrust.

The FTC and the Department of Justice announced today they will host a public forum on December 10 to study the issue more closely. The speakers include IP lawyers, law professors specializing in these so-called PAEs, and even officers of high-profile patent trolls like Intellectual Ventures and Round Rock Research LLC. Executives from companies that have been critical of patent-holding companies, such as Cisco and Rackspace, will also be featured.

"There has been a great deal of controversy and disagreement about whether they stifle innovation and whether they are an anticompetitive problem," FTC Chairman Jon Leibowitz told WSJ. "What we want to do is understand the industry better."

Historically, antitrust enforcers have a hard time in court when they come up against patents. For years, the FTC has been trying to shut down so-called "pay to play" settlements, where branded drug companies pay off their generic competitors to end patent challenges. But those arguments have continually lost in appeals courts, where judges have ruled the companies' behavior is protected because of their patents.

All patents are anti-competitive by definition. If anything, patent trolls use of patents is less anti-competitive because they use them against anyone they can without discrimination and are mostly after money, whereas practicing entities use patents as weapons against their direct competitors, sometimes even forcing them out off the market.

Patent trolls are arguably more harmful than abusive practicing entities, but it isn't because of anti-competitive reasons.

Definitely a step in the right direction. It is just as important that they review the guidelines that the patent office uses to issue patents. Imagine what the world would be like if basic, essential innovations like bandages and umbrella were patented.

All patents are anti-competitive by definition. If anything, patent trolls use of patents is less anti-competitive because they use them against anyone they can without discrimination and are mostly after money, whereas practicing entities use patents as weapons against their direct competitors, sometimes even forcing them out off the market.

Patent trolls are arguably more harmful than abusive practicing entities, but it isn't because of anti-competitive reasons.

Uh, yes, it is because of anti-competitive reasons.

As in the NPE (non practicing entity) can (but probably won't) sue you in the same manner that practicing entities. It's a chilling effect.

In other words, if Apple can sue you over use of a pinch-zoom patent, so can NPE. Remove Apple's ability to sue and you also neutralize the NPE.

What Cisco (being a practicing entity) wants is the ability to still use patents to collect license fees and sue infringers without an NPE from being able to do so.

Definitely a step in the right direction. It is just as important that they review the guidelines that the patent office uses to issue patents. Imagine what the world would be like if basic, essential innovations like bandages and umbrella were patented.

Speaking as a Canadian business owner who develops software, the USA's software patent trolling is a significant enough problem that it could seriously cripple the US economy through the simple absence of software and services.

One practical solution for our company is developing software that does not set foot in the USA. The risk of being pulled into a frivolous lawsuit is real, and the distraction is significant enough that it wipes out any interest in participating in the US market. There's a significant enough patent troll market in the USA that this practice has become sustainable as a secondary business. That's bad news.

Would it be legal to invalidate a patent dispute retrospectively and reclaim the money already won by patent trolls?

So here's the issue; you have to devise a system where a legitimate infringement can still result in damages, while rejecting invalid patents while discouraging weak patents.

In other words, Apple will still get paid for people infringing their legitimate patents, Apple won't bother to sue for weak patents, and Apple wouldn't be allowed to sue for invalid patents.

So what we really need to fix is the USPTO. If they stopped giving out highly tenuous patents in the first place then companies wouldn't use them to sue. Once someone has a patent on something it puts them in a strong position. The courts shouldnt have to keep ruling rubbish patents invalid, the USPTO should do its job right in the first place and not issue them.

They should only be giving out patents for things that are truly novel, non obvious and useful as per patent law. They seem to be taking an overly broad view of the meaning of these requirements in recent years.

Patents should also not be issued for just an idea. You should have to show how that idea would be implemented, in detail, to receive a patent.

But what if the troll has a strong, "valid" patent? Any discrimination in terms of "practicing" will nail independent inventors to the wall.

A small change in law would fix this - "license it or lose it"Patent becomes unenforceable if you don't create something using the patent or license it within x years. This will encourage the sale and licensing of patents and put a stop to trolls holding patents until someone releases a product, and then sueing them.

In other news, the FBI announced that it was forming a public committee to decide whether pedophilia penalties are too harsh. To ensure objectivity, half of the committee will consist of convicted pedophiles.

Definitely a step in the right direction. It is just as important that they review the guidelines that the patent office uses to issue patents. Imagine what the world would be like if basic, essential innovations like bandages and umbrella were patented.

A small change in law would fix this - "license it or lose it"Patent becomes unenforceable if you don't create something using the patent or license it within x years. This will encourage the sale and licensing of patents and put a stop to trolls holding patents until someone releases a product, and then sueing them.

I think one of the possibly unintended consequences of the current patent system is that by allowing entities to sit on an invention and prevent others from making use of it, they effectively prevent anyone from improving on it, and it stalls general innovation. I think obligatory licensing is an interesting idea on that basis.

(Hypothetically, in a world without IP law, if someone 'stole' my invention from me and improved upon it, there'd be nothing to stop me from reverse-engineering and 'stealing' their improvements back into my own product. I think that gives the best outcome to the public, as now there's two improved products for them to choose from rather than just my original one, but that's just me being an idealist...)

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

Definitely a step in the right direction. It is just as important that they review the guidelines that the patent office uses to issue patents. Imagine what the world would be like if basic, essential innovations like bandages and umbrella were patented.

Band-Aid, the brand, is a trademark. Bandages, as strips of gauze attached to a particular adhesive strip, were patented and unavailable to any other company making something similar enough until it expired. Over the years, quite a few variations of bandages have been patented, like decorative Band-Aids, but not the general concept of sticky bandages since that expiration.

TL;DR: Yes, J&J patented all adhesive bandages for a couple of decades.

You (I'm from Poland, EU do not honor ANY software patents), CAN NOT reform USPTO.

1) Each patent need X humans for just processing (adding to database, checking spelling, checking that every legal document is attached, etc) IT DO NOT CHANGE OVER TIME.

2) Each patent need Y humans for checking if it is not repetition of already granted patent.IT GROW OVER TIME. (As more patents are granted. Exponential growth)

3) Each patent need Z humans for checking if it is not rip off of some scientific research that is publicly available.IT GROW OVER TIME. (As more research is published. Exponential growth)

4) Each patent need W humans for checking if patent is not simple rip off from current patent/research with just changing media, or means of execution (like adding "over interent" or "over computer" *)IT GROW OVER TIME. (As more and more research/patents are added. Exponential growth).

So as you can see. USPTO can not win this race. There always will be risk of lack of HUMAN RESOURCES. And then you have problem of EXPERTS. And FUNDS. And of cost of PATENT APLICATION (too high, and "lonely inventor genius**" can not afford patent).

USPTO will have to spend more and more cash on the process of granting patents and/or lower quality.There is NO escape from that.

* Federal Court that is hosting patent litigations seam to be of opinion, where "over SOMETHING-NEW-HERE" is perfectly fine reason for granting patent. So if it stand, than you can scratch 4). However Supreme Court have different opinion. However FC seam to think better, and even quote SC as if SC supported their views. Nice mess.

** Patents are meant to foster RESEARCH, PROGRESS, INNOVATION. But when talking about protection of those (as incentive for making more of them), usually "poor" inventor is THE reason for such protection. So if this poor is too poor to get that protection. Whole idea of patents as means of protection become moot.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

So the question comes down to: which evil do you want to win?

The ones who make stuff.

You do realize that doesn't mean we'll end up with good laws. Take the DMCA or general copyright law for that matter. Just because we have bad laws now, does not mean we'll end up with good laws if the only people who have say in it are the ones with enough money to bribe congress to get what they want.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

So the question comes down to: which evil do you want to win?

The ones who make stuff.

You do realize that doesn't mean we'll end up with good laws. Take the DMCA or general copyright law for that matter. Just because we have bad laws now, does not mean we'll end up with good laws if the only people who have say in it are the ones with enough money to bribe congress to get what they want.

Clearly, but if the choice is between companies that make stuff vs companies that make nothing, the companies who make stuff pay for shipping, pay for retail, pay for infrastructure, pay employees, and have goods that people generally use or buy.

A small change in law would fix this - "license it or lose it"Patent becomes unenforceable if you don't create something using the patent or license it within x years. This will encourage the sale and licensing of patents and put a stop to trolls holding patents until someone releases a product, and then sueing them.

I think one of the possibly unintended consequences of the current patent system is that by allowing entities to sit on an invention and prevent others from making use of it, they effectively prevent anyone from improving on it, and it stalls general innovation. I think obligatory licensing is an interesting idea on that basis.

(Hypothetically, in a world without IP law, if someone 'stole' my invention from me and improved upon it, there'd be nothing to stop me from reverse-engineering and 'stealing' their improvements back into my own product. I think that gives the best outcome to the public, as now there's two improved products for them to choose from rather than just my original one, but that's just me being an idealist...)

The issue is when you've just sunk £10,000,000 into developing and perfecting your idea, and the cost per unit is £2 to produce you still need to recoup that development money, however the person that stole the invention from you only needs to recoup the money spent on creating the production line. Even my basic business knowledge suggests that this is a poor way to stay in business.

This is why patents were developed, as it gives the inventor a reasonable period of time to recoup their development costs before everyone else wades in. If they're a one shot wonder and never create a new invention again then come 25 years, they'll go out of business, however if they keep innovating and producing new products that they take to market/licence to other companies that can take it to market, then they stay profitable.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

So the question comes down to: which evil do you want to win?

The ones who make stuff.

You do realize that doesn't mean we'll end up with good laws. Take the DMCA or general copyright law for that matter. Just because we have bad laws now, does not mean we'll end up with good laws if the only people who have say in it are the ones with enough money to bribe congress to get what they want.

Clearly, but if the choice is between companies that make stuff vs companies that make nothing, the companies who make stuff pay for shipping, pay for retail, pay for infrastructure, pay employees, and have goods that people generally use or buy.

But if we listen to them, patent law is probably going to read almost identically to copyright law, and will be abused worse than it is today. Sometimes, solutions can sound counterintuitive, but perhaps the solution is to relax the law.

If the law requires the patent holder to actually produce a product or at least license the patent within X amount of time to keep a patent valid, it would help patent law more than hurt it. And perhaps even have the lifetime of the patent be based on the expected life of the product its for. 20 years is probably too long for a product that is replaced every other year, but it's fine for something that is kept 10-20 years. Regardless, the 20-year patent life should not be raised. Patent protection is meant to stimulate innovation, not a create a cash cow.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

So the question comes down to: which evil do you want to win?

The ones who make stuff.

You do realize that doesn't mean we'll end up with good laws. Take the DMCA or general copyright law for that matter. Just because we have bad laws now, does not mean we'll end up with good laws if the only people who have say in it are the ones with enough money to bribe congress to get what they want.

Clearly, but if the choice is between companies that make stuff vs companies that make nothing, the companies who make stuff pay for shipping, pay for retail, pay for infrastructure, pay employees, and have goods that people generally use or buy.

But if we listen to them, patent law is probably going to read almost identically to copyright law, and will be abused worse than it is today. Sometimes, solutions can sound counterintuitive, but perhaps the solution is to relax the law.

Your suggestions don't relax the law, it makes it more restrictive.

Quote:

If the law requires the patent holder to actually produce a product or at least license the patent within X amount of time to keep a patent valid, it would help patent law more than hurt it.

Actually producing a product means you have just voted in favor of the companies making stuff. What is your disagreement here? That neither side should be allowed to influence the law?

Quote:

And perhaps even have the lifetime of the patent be based on the expected life of the product its for. 20 years is probably too long for a product that is replaced every other year, but it's fine for something that is kept 10-20 years. Regardless, the 20-year patent life should not be raised. Patent protection is meant to stimulate innovation, not a create a cash cow.

Again, you are not relaxing the law but making it more restrictive; not that I disagree, I just think you're disagreeing on principle but saying the same things.

As an example, I do believe design patents only have a 14 year term. Trademark only has a 5 year term after a company stops using it.

Perhaps we can meld the two and say utility patents also have a 14 year term and expires 5 years after a company stops making or licensing something using said patent.

So if you get a patent and don't make something with it and don't license it, it expires after 5 years, which assumes that 5 years is long enough to bring something to market. If you license it, you automatically get a 5 year extension (with a limit to the max of 14), meaning you have an incentive to license it within 5 years to give yourself 10 years to bring a product to market.

The reason patent law, unlike copyright law, will be changed is because the people with the money want it to change. Patent trolls don't bribe congress; but real companies have no problem doing it. Patent law will change because that's the cheapest way "law abiding" companies know how to win against someone playing by the rules.

So the question comes down to: which evil do you want to win?

The ones who make stuff.

You do realize that doesn't mean we'll end up with good laws. Take the DMCA or general copyright law for that matter. Just because we have bad laws now, does not mean we'll end up with good laws if the only people who have say in it are the ones with enough money to bribe congress to get what they want.

Clearly, but if the choice is between companies that make stuff vs companies that make nothing, the companies who make stuff pay for shipping, pay for retail, pay for infrastructure, pay employees, and have goods that people generally use or buy.

But if we listen to them, patent law is probably going to read almost identically to copyright law, and will be abused worse than it is today. Sometimes, solutions can sound counterintuitive, but perhaps the solution is to relax the law.

Your suggestions don't relax the law, it makes it more restrictive.

Quote:

If the law requires the patent holder to actually produce a product or at least license the patent within X amount of time to keep a patent valid, it would help patent law more than hurt it.

Actually producing a product means you have just voted in favor of the companies making stuff. What is your disagreement here? That neither side should be allowed to influence the law?

Quote:

And perhaps even have the lifetime of the patent be based on the expected life of the product its for. 20 years is probably too long for a product that is replaced every other year, but it's fine for something that is kept 10-20 years. Regardless, the 20-year patent life should not be raised. Patent protection is meant to stimulate innovation, not a create a cash cow.

Again, you are not relaxing the law but making it more restrictive; not that I disagree, I just think you're disagreeing on principle but saying the same things.

As an example, I do believe design patents only have a 14 year term. Trademark only has a 5 year term after a company stops using it.

Perhaps we can meld the two and say utility patents also have a 14 year term and expires 5 years after a company stops making or licensing something using said patent.

So if you get a patent and don't make something with it and don't license it, it expires after 5 years, which assumes that 5 years is long enough to bring something to market. If you license it, you automatically get a 5 year extension (with a limit to the max of 14), meaning you have an incentive to license it within 5 years to give yourself 10 years to bring a product to market.

Actually, it does make it more lax. What I suggest does not make it harder to apply for or even be awarded a patent, but it does lessen the ability for people to apply for or buy patents solely for litigation. It makes it easier not to violate the law, which is why what I'm saying what we should do is actually relaxing the law. Patents are suppose to be about your exclusive right to sell something you invented. Why should patents be maintained for the sole purpose to sue people? It's not to benefit society, that's for sure.

You (I'm from Poland, EU do not honor ANY software patents), CAN NOT reform USPTO....

Too precious for words! Too often the resources required for any process to actually function properly are forgotten.

I'd also add one more observation. For a topic of such importance, why is only one day scheduled for the hearing, especially as that will be just enough time to read statements without the usual Q&A. Heck, it should take months, especially if they add in public commentary, which they should. The only public commentary they seem to be interested in is from the 'pros.'